Fraud and cybercrime have cost the charity sector almost £9 million in the last 12 months, a new study has revealed.
The data, published by the Charity Commission, shows that there were 1,059 separate incidents of fraud reported by organisations between April 2020 and March 2021.
However, the “true scale” of fraud against charities is “believed to be much higher”, as fraud often goes unreported.
The report also suggests that the coronavirus pandemic has increased the risk of fraud, with 65 per cent of not-for-profits stating that remote working and virtual sign-off processes have exposed their organisation to criminals.
The Charity Commission is now urging trustees to sign up to a new “Stop Fraud Pledge”. Developed in collaboration with the Fraud Advisory Panel, the initiative encourages charities to take six “practical” steps to reduce the chances of falling victim to fraud. This includes:
- Appointing a suitable person (staff member, volunteer or trustee) to champion counter fraud work throughout our organisation.
- Ensuring that all our trustees are aware of their legal duty to protect the charity’s assets.
- Consulting with staff, volunteers and trustees to identify the types of fraud that threaten us and the ways we can prevent them.
- Creating a written fraud policy and sharing it regularly – with staff, volunteers and trustees – so that everyone understands what fraud is and how they can help prevent it.
- Performing checks on the individuals and organisations with whom we have a financial relationship.
- Assessing each year how well our fraud controls are working, taking into account new risks and making improvements as needed.
Commenting on the report, Helen Stephenson CBE, Chief Executive of the Charity Commission, said: “Sadly, as these figures we have released today show, there remain criminal individuals who would take advantage of organisations that seek to do good and of those that generously donate.
“That is why I am calling on all charities to take the risk of fraud seriously by signing up to our new Stop Fraud Pledge and taking six simple steps to protect their charity. Combatting fraud gives the public confidence that their money is safe, protects vital funds for charities and more widely helps maintains trust in the charities we all care so passionately about.”
David Clarke, Chair of the Fraud Advisory Panel, added: “With fraud and cybercrime at record levels it has never been more important for charities to be aware of the risks and how they might be affected.
“As we emerge from the pandemic, charities need to recover and flourish without fear of fraud. Taking relatively simple measures can go a long way to protecting your charity and keeping it safe from harm.”
Charities can sign up to the Stop Fraud Pledge here.
For help and advice on all third sector financial matters, please get in touch with our charity team.